Do you have a hard time keeping up with your monthly loan payments? If so, you should discuss this issue with a credit counseling company. You may also talk to your lender to see if it's possible for you to get a rate that's affordable and more fitting, based on your current financial standing.
Don't hesitate to seek assistance from credit counselors, as they can give you fitting advice. They may suggest one way to prevent foreclosure and to default on payments, and that is to apply for a loan modification. But there are more issues that you need to know about. You will find the tips below useful, especially if you are currently trying to keep up with your monthly mortgage payments.
1Understand Why Relapse Rates Are High
Some say that the home relapse rates can be as high as 60% for the first eight months, particularly for those homeowners who have been approved for a loan modification. There are two reasons for this high relapse rate. First, the borrower failed to obtain a mortgage payment that he can readily afford. The second reason for a high relapse rate is that the main issue, whether it's inadequate income or inefficient budgeting, was not considered.
A huge issue regarding lowering mortgage dues is that the lenders' main job is to get as much money as they can from borrowers. Lenders could convince homeowners to be amenable to having reduced monthly payments. Or, they could choose to have higher fees per month, which can severely affect a borrower's budget.
2Get A Good Deal At The Onset
In order to be successful at paying off your mortgage, you must understand that it's crucial to get a really good deal during your initial application so that you'll have some buffer in case you encounter financial issues along the way. In case your lender refuses to cooperate with you or if he is not flexible, and you know that it will be difficult for you to afford all those monthly payments: don't go for that deal. You shouldn't accept that home deal unless you believe that you can get some relief through loan modification before you can discover a more long-term solution to your problem, which could involve selling your property.
There are also problems with budgeting: either you fail to use your budget because you are just not that type of person who likes to follow one, or you fail to stick to the budget that you've come up with. When you are having such problems, seek out the help of a credit counselor. Search for one who is experienced and reliable. Remember that today's economy is quite tough, and it's now harder to keep a satisfactory credit score.
3Work With A Credit Counseling Company
Through the help of a credit counseling agency, you can work at improving your diving credit score. These agencies can provide you with assistance so that you could deal with your debt and budget your money more efficiently to avoid the same problems later on. When choosing a credit counseling company, go for one that has a good name and one that is registered or licensed, especially if such is required by your state. Find useful details and other helpful information regarding how to locate good credit counseling agencies through the FTC (Federal Trade Commission) and the United States Trustee Program websites.
4Make Small Payments Than None At All
Agencies take a lot of risks; they take the risk of their borrowers getting bankrupt and failing to make their payments, which is why they are amenable to receiving less payment rather than no payment at all, just like mortgage lenders. Loan creditors who do not have assets for security are at a bigger risk, as well. In case you loan a new vehicle, the estimated value of the car will decrease by around $8,000 as soon as you drive away with it. This means that the company will have already lost $8,000 if they repossess and then attempt to resell that car. But you can readily make a deal with a finance company if you have a good payment history.
5Take Advantage Of Credit Card Companies
You could also discuss your issue with your credit company to get a better deal. It's hard, and it could fail, but it's worth a try. It's possible that your credit card company will be amenable to either reducing the interest rate or forgiving the late payment and charging you a fine for that. There's no harm in asking, and that's the only time you'll know what options they could offer.
The worst case scenario is if your credit card company refuses your request. In case this happens, call your loan company and inform them that you don't have the money for the repayment requirements. If, say, you are unemployed, check out what forms of forbearance options you could use until you get hired, and you can get assistance from government-supported student loan companies. You can also defer payments until you finish your course and find a job, which is a huge advantage if you have chosen to continue studying without taking any work, even part-time. Once you are able to make your payments, see to it that you pay more than the minimum amount.
6Pay More Than The Minimum
Paying more than the minimum is very helpful in lowering the total loan amount on your high-interest loans, as well as credit cards. However, paying more than the minimum may not be the best move when it comes to your other accounts. Thus, it's essential to determine which accounts have higher priority.
Evaluate the most recent credit card statement that you received and see which loans have the highest interest rates. These are the ones that you should focus on paying off first. Perhaps you can move your high-interest balance to the card with the lowest interest rate, as well. But you need to learn if there have been changes in the interest rates and policies, before proceeding with the balance transfer.
7Provide Yourself An Allowance
Giving children an allowance so that they'll learn financial responsibility and appreciate the value of money is an old and beneficial concept. Through this, children will learn how to spend their money wisely and not go over their budget; however, their parents may be breaking their own budgets. Fees could add up if you just pull out your ATM card any time you need cash. Perhaps you could make a weekly budget so that you can withdraw that amount in one transaction only. Moreover, avoid withdrawing more once you've used up your weekly budget.
8Haggle With Creditors
In foreign countries, it's possible to actually haggle to get goods or services at a lower price. Although this is not common in the United States, the practice of haggling is becoming popular again, particularly during the past decade. Due to economic hardship, haggling does help in saving you a few precious dollars; plus, it keeps the market dynamic. Haggling is not typically accepted when dealing with retailers or when talking to your utility suppliers, yet you could try it in certain situations.
Through the information that you got here, you are now more ready to start your negotiations with your lender. In case you are applying for a loan modification, see to it that you consult with a credit counseling agent first. The important thing here is that you are doing something to make your payments, lower your loans, as well as avoid future problems that could spell financial disaster. Hopefully, all goes well for you!